GameStop financials: Digital PC and console sales up 61% YoY to $290 million

GameStop has announced during its latest financial report that digital revenues for the retail chain were up 61 percent year-over-year and it expects the digital momentum to continue since console and PC digital sales accounted for $290 million.

For the year ending January 29, 2011, sales reached $9.47 billion with a profit of $408 million. These figures show an increase of 4.3 percent and 8.1 percent year-over-year, respectively.

“In 2010, our innovations in e-commerce, digital offerings and PowerUp Rewards helped drive record sales, earnings and market share,” said CEO Paul Raines. “Our focus in 2011 is to build on the success of our PowerUp Rewards program, expand our used business and increase our digital revenues, all while delivering strong financial results.”

GameStop expects packaged goods to be a bit flat in 2011, with growth only estimated at 3 percent for the year.

“What we believe will happen is that there’s going to be tremendous acceleration in the digital business,” said company president Tony Bartel in a statement. “We see that growing over 20 percent [in the industry]. We see DLC in particular being a very strong growth vehicle… We believe we’ll significantly outpace [the industry growth rate] with digital growth similar to what we saw in 2010.”

During a call to investors, it was noted that the best-selling software for the retailer was Pokemon Black and White. Bartel also told investors recently released Dragon Age II and Homefront were proving to be rather popular choices among customers.

“Pokemon Black and White were extremely strong for us,” said Bartel. “Dragon Age II and Homefront were strong as well. We’re obviously very excited about Nintendo 3DS – Super Street Fighter IV, The Sims, Nintendogs+Cats are all going to be very strong titles. Mortal Kombat we’re seeing very strong reservations for, SOCOM IV, Portal 2 and then LA Noire we’re also seeing very strong reservations for.

“So that gives you a good update on what we’re seeing for the second quarter.”

New hardware sales came in at $1.7 billion, which is slightly less than the year prior while software climbed a bit, and made up 41.9 percent of total profits with $3.97 billion. However, Kinect and Move both seem to be doing well in GameStop stores.

“We have struggled to stay in stock on the Sony Move controllers; there’s a tremendous amount of demand for that,” said Bartel. “Provided we can get more into stock, we should see some strong growth there as well.”

“[Kinect] continues to have very strong demand, and fortunately Microsoft has been able to meet that demand,” he added. “So we have strong demand, good stock, and we continue to see strong sell of the unit. Attach rate is where we anticipated it would be.

“We also just got back from a meeting with all the publishers… and most are developing games for the Kinect platform. We’re happy to see that there’s strong support for the Kinect platform.”

Used game sales increased $75 million over the prior year, yet made up a lower percentage of total sales. Used sales came in at $2.47 billion which is a quarter of what digital sales brought the company.

“We’re on pace to sell more DLC in this first quarter than we sold in all of last year,” said Bartel. “We’re introducing mom and dad to DLC. Lots of consumers who’ve never even understood what DLC is are now getting introduced to it; they’re liking it and buying more and more of it.”